To find new principles for inhibiting serine proteases, we screened phage-displayed random peptide repertoires with urokinase-type plasminogen activator (uPA) as the target. The most frequent of the isolated phage clones contained the disulfide bridge-constrained sequence CSWRGLENHRMC, which we designated upain-1. When expressed recombinantly with a protein fusion partner, upain-1 inhibited the enzymatic activity of uPA competitively with a temperature and pH-dependent K(i), which at 25 degrees C and pH 7.4 was approximately 500 nm. At the same conditions, the equilibrium dissociation constant K(D), monitored by displacement of p-aminobenzamidine from the specificity pocket of uPA, was approximately 400 nm. By an inhibitory screen against other serine proteases, including trypsin, upain-1 was found to be highly selective for uPA. The cyclical structure of upain-1 was indispensable for uPA binding. Alanine-scanning mutagenesis identified Arg(4) of upain-1 as the P(1) residue and indicated an extended binding interaction including the specificity pocket and the 37-, 60-, and 97-loops of uPA and the P(1), P(2), P(3)', P(4)', and the P(5)' residues of upain-1. Substitution with alanine of the P(2) residue, Trp(3), converted upain-1 into a distinct, although poor, uPA substrate. Upain-1 represents a new type of uPA inhibitor that achieves selectivity by targeting uPA-specific surface loops. Most likely, the inhibitory activity depends on its cyclical structure and the unusual P(2) residue preventing the scissile bond from assuming a tetrahedral geometry and thus from undergoing hydrolysis. Peptide-derived inhibitors such as upain-1 may provide novel mechanistic information about enzyme-inhibitor interactions and alternative methodologies for designing effective protease inhibitors.